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UniCredit earnings Q4 2024

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4 months ago

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The Commerzbank AG headquarters, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.

Emanuele Cremaschi | Getty Images News | Getty Images

Italy’s second-largest lender UniCredit on Tuesday posted a fourth-quarter profit beat, raising shareholder returns amid market focus on the bank’s M&A overtures.

Net profit attributable to the group came in at 1.969 billion euros ($2.03 billion) in the fourth quarter, compared with an analyst forecast of 1.803 billion euros, according to a LSEG-compiled consensus.

Revenues reached 6 billion euros over the period, versus analyst expectations of 5.898 billion euros.

Other fourth-quarter highlights included:

  • Return on tangible equity of 11.5%, compared with 19.7% in the third quarter.
  • CET 1 capital ratio, a measure of bank solvency, was 15.9% from 16.1% in the previous three-month stretch.

The lender, whose full-year net profit added an annual 8.1% to 9.31 billion euros, pledged bolstered shareholder returns in 2025, upping its cash dividend pay-out guidance to 50% of net profit, from 40% in 2024. UniCredit also said it targets a RoTE performance above 17% this year, compared with the 17.7% of 2024.

In a statement accompanying the results, CEO Andrea Orcel said UniCredit was progressing onto the next phase of its strategy and will accelerate its “growth, aspiring to further widen the gap with our competitors, close our valuation gap, and cementing UniCredit as the bank of Europe’s future and benchmark for banking.”

UniCredit has been at the epicenter of Italy’s nascent push for consolidation since the second half of last year, following its surprise build — and later increase — of a stake in Germany’s Commerzbank, and its takeover offer for domestic peer Banco BPM at the end of 2024. The Italian lender has so far rejected UniCredit’s opening play, but CEO Andrea Orcel told Bloomberg his opening bid for Banco BPM was only a “fair starting point.”

The German administration has decried UniCredit’s “very aggressive, very opaque, untransparent” bid for Commerzbank, with Rome likewise resistant on the domestic front, amid broader government plans to form a third Italian banking titan alongside Intesa Saopaolo and UniCredit. Complicating the landscape of Italian dealmaking, UniCredit on Feb. 2 unveiled a 4.1% stake build in Italy’s top insurer Generali Group, but has stressed that “no strategic interest” motivates the venture.

Critically, Italy operates under so-called golden powers legislation which permits Rome to intercede or set conditions on foreign and domestic corporate takeovers in key sectors such as defense, energy, communications and banking.

Market participants are watching which of its twin-pronged suits UniCredit will commit to, or whether it will ambitiously keep both targets in sight.

This breaking news story is being updated.

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Swiss government proposes tough new capital rules in major blow to UBS

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2 days ago

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June 6, 2025

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A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement. 

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”

The prospect of stringent Swiss capital rules and UBS’ extensive U.S. presence through its core global wealth management division comes as White House trade tariffs already weigh on the bank’s fortunes. In a dramatic twist, the bank lost its crown as continental Europe’s most valuable lender by market capitalization to Spanish giant Santander in mid-April.

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